Goldman Sachs mega fund backs female entrepreneurs

One of the world’s biggest investment banks, Goldman Sachs, has recently announced it will back female entrepreneurs and their companies to the tune of $US500 million. Called “Launch With GS” the program will invest capital in businesses run or founded by women.

The initiative is underpinned by more than just a desire for diversity; according to chief strategy officer Stephanie Cohen, Goldman Sachs sees the potential reward in backing women:

“The global economy is propelled by innovation, creativity and the sharing of diverse perspectives. Effectively shutting out half the population from conversations at the highest levels of business is holding everyone back.

“Our goal with Launch With GS is to generate strong investment returns. The bottom line is this makes sense for our business — because investing and helping companies grow is our business. We also hope it makes a difference for women who have big ideas but find themselves cut out of the funding ecosystem.”

The program will invest $US500 million of the firm’s and clients’ capital in private, late-stage, women-founded, women-owned or women-led companies, including directly funding companies as well as seeding women investment managers who are starting their own funds.

This is not the first big investment Goldman Sachs has made in female entrepreneurs and their businesses. The famous US investment bank, in partnership with Coursera, also runs its “10,000 Women” investment and education program, providing female entrepreneurs across the world with a digitised curriculum and interactive platform of women business owners.

One major reason for the launch of the program is that venture capital funding is still very male-dominated; the majority of VC firms are run by men and the majority of investment goes to male entrepreneurs. For women’s businesses to achieve an equal footing, this gender funding gap needs to be addressed.

Recently, the Boston Consulting Group report titled ‘Why Women-Owned Startups Are a Better Bet’ found businesses founded and led by women more often made a better return on investment than male-led businesses. The report identified the current gender funding gap, in which women receive vastly less in venture funding than men, as a strong reason why women’s businesses are in fact undervalued as an investment.

“Most important, investors should understand that current market forces make women-owned companies very promising opportunities. The lack of funding means that there is less competition for women-backed companies, and those companies, on average, perform better than those with all-male founders,” the report said.

Initiatives like “Launch With GS” show that big banks and investment houses are beginning to take female entrepreneurs seriously. They can see that women all over the world are starting and running successful businesses. Investors who can’t see past their biases and embrace the rise of female entrepreneurs run the risk of being left behind.

Fi Bendall is chief executive of The Female Social Network and a Westpac-AFR 2015 100 Women of Influence, who was described by CEO Magazine as "The CEO's secret weapon". An expert and pioneer in digital strategy, she has over 23 years’ experience in the digital and tech sectors.

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